IPTV a local, national debate

Colorado Springs Business Journal, Feb 17, 2006 by Rob Larimer

A federal court judge is expected to rule this month whether Falcon Broadband will be allowed to offer cable television to Colorado Springs residents without a franchise agreement - an issue that mirrors a national debate about Internet Protocol Television.At issue is whether companies that offer bundled telephone, Internet and television services to homes through fiber optic lines will be held to the same franchise requirements as cable TV companies.

Adelphia Communications filed a federal lawsuit last month alleging Falcon Broadband's entry into the city's cable TV market would be illegal under the Cable Communications Act of 1984, which mandates that cable television companies offer their services to the entire city and operate under a franchise agreement with a local authority, such as a municipality. On the national scene, Verizon Communications and AT&T approached Congress this week with a request to drop the requirement, saying the laws are outdated and harken to a time when a cable company's potential monopoly status might not have shielded consumers from lower prices. On the local scene, the federal courts must decide whether to uphold the 1984 Cable Act.Falcon Broadband owner Randy De Young said that his license from the FCC, an open video system license, does not require him to have a franchise agreement to offer television to isolated parts of the city.FCC spokeswoman Rebecca Fisher said the commission relies on a 1999 U.S 5th Circuit Court of Appeals ruling, which states OVS operators are not bound by the FCC to have franchise licenses.The FCC stated that the decision of whether to impose a franchise on an open video system operator is committed to the discretion of the locality, Fisher said. So, it looks like the decision is up to the LFA (local franchise authority).In this case, the local authority is the City of Colorado Springs, and De Young said the city has never asked him to obtain a franchise license.City Attorney Pat McDivitt has said that the city has chosen to remain neutral on the matter, a move which caused Adelphia to name Colorado Springs in its lawsuit and De Young to criticize the city.The city has not stepped up for the interests of the consumers, De Young said, noting that competing television companies could drive down prices.But Adelphia says its franchise agreement with the city guarantees that competing companies will be required to have a franchise agreement with the city just as it has - a notion that guided the company to invest $75 million during the last five years to install cable lines to reach new customers.Adelphia alleges in its lawsuit that De Young had a contract with the developer of the Gold Hill Mesa neighborhood, which is under construction west of downtown, to provide bundled Internet and television services. In a response to Adelphia's lawsuit, De Young and the Gold Hill Mesa developer deny they ever had an agreement. We may have talked about things, but an agreement isn't an agreement until you sign a contract, De Young said.A signed contract notwithstanding, Adelphia contends that even a documented intention to provide services in its franchise territory threatens the company's financial investments.De Young is quoted in an industry press release saying that his company has plans to offer service to homes in the Colorado Springs area. De Young said he also has spoken with other developers in the city about using his service.One reason IPTV providers are hesitant to apply for franchise status is that under the current law they would have to leave one-third of their delivery lines open to competing companies to use for their delivery.